Misappropriation of Trade Secrets

The alleged misappropriation by one competitor of the
trade secrets of another frequently gives rise to combined
antitrust/business tort litigation. As demonstrated in Chapter
1, although antitrust claims may arise out of predatory or
exclusionary conduct, mere proof of tortious conduct, standing
alone, is insufficient to establish an antitrust claim.
Nonetheless, proof of such conduct may be strong evidence of
predatory intent, and may support punitive damages awards
greatly in excess of the statutory treble damages allowed under
the antitrust laws. This chapter addresses the
misappropriation of confidential business information, or trade
secrets, by one competitor from another. – Eds.
A. Introduction
State trade secret law is invoked to redress the misappropriation of
confidential business information that, although not patentable,
nonetheless qualifies for trade secret protection. The discussion that
follows examines the principles generally applicable to claims of trade
secret misappropriation as reflected in the Restatement (Third) of Unfair
Competition, the Uniform Trade Secrets Act and similar state statutes.1
B. Purposes of Trade Secret Protection
As the Supreme Court has acknowledged, “[t]he maintenance of
standards of commercial ethics and the encouragement of invention are
1. For a list of states that have adopted the Uniform Trade Secrets Act or a
statutory note (1993) [hereinafter RESTATEMENT]; see also MILGRAM ON
TRADE SECRETS (1991). Misappropriation of trade secrets also may give
rise to criminal liability under state and federal statutes; see, e.g., TEX.
PENAL CODE ANN. § 31.05(b) (Vernon 1994); 18 U.S.C. §§ 1341, 1343
(mail and wire fraud); National Stolen Property Act, 18 U.S.C. § 2314.

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